To boost productivity in the future, Asian governments will have to implement well-targeted structural reforms today.
Asean
Vietnam enters new playground after TPP negotiation ends
After five years of negotiations with countless disagreements and obstacles, trade ministers of 12 TPP member states reached the final consensus on the world’s largest free trade agreement on October 5 evening. Before the agreement is officially signed, TPP must be approved by the heads and parliaments of the 12 member states countries. VN economy to prosper According to many experts, the TPP will create momentum for Vietnam’s economic development. Vietnam’s economy is expected to benefit most from the TPP as it will help the country reach markets that are still closed to the country. Economist Le Dang Doanh said that this is an important milestone for Vietnam’s economy. Vietnam is the country with the lowest level of development among TPP member countries. “We import aircraft and software from the US and export agricultural products, textiles and footwear to this country. Vietnam’s exports can rise greatly. Also, many foreign investors will invest in Vietnam to benefit from the incentives that Vietnam enjoys,” said Doanh. However, Doanh pointed out major challenges for Vietnam such as technical barriers like standards on design, packaging, antibiotic residues, chemicals, labor conditions. Therefore, Vietnam needs to improve economic conditions of local enterprises to take advantage of the opportunities brought about by TPP. Mr. Sudhir Shetty, Chief Economist of the World Bank in East Asia and the Pacific, said that TPP would bring many benefits to Vietnam in the long term. This is a tremendous boost to Vietnam but it will also bring about a lot of pressure on domestic manufacturers, who will have to compete more fiercely but this will also help boost performance. Shetty said that with the best scenario, the TPP will help member countries have access to markets which are previously inaccessible. Besides, with participation in TPP, Vietnam’s GDP can increase by 8-10% by 2030 and the country can attract more foreign investment. A research work indicates that the TPP can bring about $3.7 billion each year for Vietnam’s GDP. Dr. Nguyen Duc Thanh, Director of the Vietnam Economic Policy Research Institute, said: “The increase in Vietnam’s GDP when we join the TPP is an increase in consumption, exports and investment, including FDI and domestic investment. The biggest advantage of Vietnam after joining the TPP would be promotion of exports.” Vietnam Ambassador to the US Pham Quang Vinh said that the TPP is the “trade agreement of the century” because it sets a very high set of standards in terms of trade, technology, intellectual property, environment, and labor while allowing deep tariff reductions (nearly 0%). According to the American Chamber of Commerce in Vietnam (AmCham), the TPP has important implications for all member countries, especially Vietnam in terms of exports, GDP growth, and job creation. Textiles and garments to benefit For textiles and garments, the key export items of Vietnam, TPP parties have agreed to phase out tariffs on these products. Most tariffs will be eliminated immediately, although tariffs on some sensitive goods will be eliminated over a longer period. Minister of Industry and Trade Vu Huy Hoang said that with the TPP, Vietnam’s textile industry will grow faster. This will benefit the poor because the industry needs millions of workers. The countries participating in the TPP are important export partners of Vietnam, particularly the US and Japan. Up to 40% of Vietnam’s export goods are to 11 countries in the TPP. Vietnam mainly exports garments and footwear to the TPP countries, accounting for 31% of total value. In particular, Vietnam is the second-largest garment exporting country to the US (after China). and the third-largest in the Japanese market. A recently released report of BIDV Securities Company says that after joining the TPP, the import structure of input materials of Vietnamese textile enterprises will see a big change, with the sources of supply to shift to the TPP member countries, reducing dependence on imported materials from China and Taiwan. The access to a $20 trillion market TPP is a free trade agreement with the participation of 12 countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the US. This will be the biggest trade deal ever since 1994, after the launch of the World Trade Organization (WTO). Although facing greater competition, Vietnam will have the opportunity to reach a broad market that accounts for up 40% of the world economy and 30% of global trade, and is expected to contribute to the world GDP with nearly $300 billion annually. Notably, all 12 member countries are also members of the Asia Pacific Economic Cooperation Organization (APEC) with a population of 650 million and a total GDP of $20 trillion. “The agreement reached today by the countries negotiating the Trans-Pacific Partnership is a very positive development,” said the IMF Managing Director Christine Lagarde in a statement released on October 5. “The agreement is not only important because of the size, as the signatory countries account for about 40 percent of global GDP; it also pushes the frontier of trade and investment in goods and services to new areas where gains can be significant,” she said. “We would need to review all the details before offering a comprehensive assessment, including the transitional effects and spillovers, but I expect that the TPP can pave the way to a new generation of deep trade integration efforts. I encourage other countries to renew their efforts to complete ongoing negotiations and the broader international community to reignite multilateral trade initiatives to ensure a cohesive global trading system.” Vietnamese businesses excited about TPP Immediately after the end of negotiations for the TPP, many Vietnamese entrepreneurs shared their excitement on Facebook and with media. The head of Khai Silk Corporation wrote on his personal Facebook page: “Fortunately, the TPP has been completed”. It included a symbol meaning “Feel wonderful”. Entrepreneur Do Ngoc Minh, the boss of LUALA hi-fashion system, noted on his Facebook: “Good news for the first day of week! Hope the Vietnam economy will thrive!” In a message to the media shortly after the completion of TPP, Pham Hong Hai, CEO of HSBC Vietnam, said: “This is a meaningful step forward for global economic integration in the world that is not only becoming increasingly connected but also more interdependent.” He added that the TPP would help increase incomes and living standards of the developing economies in Asia. Vietnam is expected to greatly benefit from the TPP from the growing demand for textiles and footwear. Meanwhile, Tran Vu Hai, Director of Hanoi Law, commented: “For law firms, it will be a period for professional development.” Nguyen Ba Ngoc, Chairman of NBN Media, said: “The TPP also shows that we need to innovate strongly and thoroughly to take full advantage of the the power of integration. Vietnam’s benefit from the TPP depends on its internal capacity and the policies of the State.” By Tran Cham/Na Son – english.vietnamnet.vnThe post Vietnam enters new playground after TPP negotiation ends appeared first on Asean Investment | Marc Djandji Blog.
Asean regional stock market
THERE is no question that the Southeast Asian region, as embodied in the Association of Southeast Asian Nations (Asean), is the bright spot of the global economy, and will remain so for years to come. The region is moving toward more economic integration not only to enhance the individual countries of Asean, but as a buffer and protection against other regions and, of course, China. No one knows exactly how this integration is going to play out. It will be a mostly free-trade zone, but without a common currency similar to the North American Free Trade Agreement. There may be some lifting of travel requirements to cross borders, but nothing like the Schengen area of Europe, which has abolished passports. Investment flow will be increased between Asean members, but there will still be some restrictions and, frankly, hesitation and caution about letting full completion of many economic sectors. However, there is little doubt that Asean members are committed to move forward as much out of necessity in the current global environment as from a desire to help each other improve. The Asean members are a very mixed bag of economic development and progress from Cambodia and Myanmar to Singapore and Malaysia. But there are some common interests and traits which may be able to hold the Asean integration together without too many problems. Part of the reason that Asean integration will be successful is that it has been a process, almost an informal joining over many years. The stock exchanges in Singapore, Malaysia and Thailand launched the so-called Asean Trading Link in 2012. This platform was designed to facilitate investors being able to trade on the home stock-market listed shares of companies in the other countries. But three stock markets do not make for a regional exchange. In fact, the Asean trading link was first only Singapore and Malaysia, which makes sense since those two countries are already closely integrated with some large companies being as much Singaporean as they are Malaysian. Philippine Stock Exchange (PSE) CEO Hans B. Sicat said this past week that the PSE intends to join the trading system as early as 2016. This would be a good move for both the Philippines and the Asean. There are problems with integrating government rules and regulations across borders that must first be resolved, perhaps requiring some changes in Philippine securities laws. Sicat said that Filipino investors are not currently allowed to buy stocks abroad through brokerage accounts at home, which is typical of our misguided protectionist policies. Hopefully, some in the legislature will recognize the need for the PSE joining the regional stock markets and will champion this cause. This is good for the Philippines, and it is good for Filipino investors. By businessmirror.com.phThe post Asean regional stock market appeared first on Asean Investment | Marc Djandji Blog.
Japan Says China Wins Indonesia Rail Contract
TOKYO—Japan said Indonesia has chosen China’s bid over its own to build a $5 billion high-speed rail project on the island of Java, ending a drawn-out process that included two unexpected reversals by Jakarta in the past month. The decision would mark a victory for Beijing as it challenges Japan’s influence in Southeast Asia, where Tokyo has long had closer ties, partly by ramping up investment in infrastructure projects across the region. Chinese Foreign Ministry spokesman Hong Lei told reporters Tuesday that Beijing supports cooperation between Chinese state rail companies and Indonesia, but he didn’t confirm that China had won the bid. Sofyan Djalil, Indonesia’s national planning minister, delivered Jakarta’s decision toYoshihide Suga, Japan’s top government spokesman and a close aide to Prime MinisterShinzo Abe, during a visit to Tokyo on Tuesday, the Japanese government said. Mr. Djalil was sent as an envoy of Indonesian President Joko Widodo. Attempts to reach Mr. Djalil for comment weren’t successful. Rini Soemarno, Indonesia’s minister for state-owned enterprises, declined to confirm Tuesday that China had been awarded the project. But she said Japan had asked for a loan guarantee from the Indonesian government, which disqualified its bid. The long-discussed, multibillion-dollar project has faced delays and seen proposal changes. According to a news release posted Tuesday on an Indonesian government website, Cabinet Secretary Pramono Anung said the government had decided to reduce the speed of the train from the initial project, and that it would soon decide on whether to continue with the project. He said a final decision would come from the office of Indonesia’s coordinating minister for the economy, Darmin Nasution. Mr. Nasution couldn’t be reached for comment Tuesday. Japan’s Mr. Suga expressed frustration with Indonesia’s handling of the project, saying large infrastructure projects should be implemented fairly and transparently, taking feasibility into account. The apparent choice of Beijing marked the second surprise from Jakarta this month. On Sept. 4, Indonesia said it had canceled plans for its first high-speed train, a 150-kilometer (93-mile) line between Jakarta and Bandung, discarding competing proposals from China and Japan. At the time, Mr. Djalil cited the two proposals’ need for Indonesian government financing as the reason for the decision and said the government would seek bids for a slower train that would cost about 40% less. China has since offered to build the high-speed link without requiring any taxpayer money or loan guarantees from Indonesia, Mr. Djalil told Mr. Suga, the Japanese government said in a statement. Mr. Suga said Japan is confident it presented the best possible proposal that could be implemented. The high-speed rail project had been viewed by both Japan and China as a step toward securing more projects both in Indonesia, which has a population of more than 250 million people, and across the rest of fast-growing Southeast Asia, which currently lacks high-speed trains. China has ramped up investment in Southeast Asia in recent years. Its creation of the new Asian Infrastructure Investment Bank has posed a further challenge to Japan, which controls the Manila-based Asian Development Bank. In an apparent response, Mr. Abe announced in May a plan to expand Japan’s financing for infrastructure projects in Asia by 30% over the next five years. Indonesia’s decision marks a setback for Mr. Abe, who has also sought to deepen ties in Southeast Asia to generate business for Japanese multinationals. Tokyo has historically enjoyed stronger ties with Jakarta, which is one of the largest natural gas suppliers to energy-import dependent Japan. Messrs. Abe and Widodo agreed in March that the two countries will cooperate in maritime security in response to growing concerns over China’s stance in the South China Sea. Kenichi Ohno, development economics professor at the National Graduate Institute for Policy Studies in Tokyo, said it was unsurprising that Japan apparently has lost to China. “It can’t compete against China in terms of price,” Mr. Ohno said. “Japan should shift away from building plants and railways, and toward building human capital such as through education.” By MITSURU OBEThe post Japan Says China Wins Indonesia Rail Contract appeared first on Asean Investment | Marc Djandji Blog.
Philippines remains attractive to Chinese investors
MANILA, Philippines – The Philippines remains an attractive investment destination among companies from Hong Kong and China despite ongoing territorial disputes. “There’s tremendous interest in what’s going on in the Philippines. It is not only Hong Kong companies but also mainland Chinese companies that are in Hong Kong. I hope we’ll see more companies coming into the Philippines soon,” Invest Hong Kong Director General of Investment Promotion Simon Galpin told The STAR in an interview. According to Galpin, more Hong Kong and Chinese firms are currently looking to see which part of their businesses is well suited to be in one of the region’s fastest growing economy. “It took time for the Philippine economic story to get through but I think it now has not only among the mainland and Hong Kong business community but also the large international business community. The Philippines is definitely the economy people are watching,” he said. “The fact that the Philippines has done so well in business process outsourcing is an indication. The Philippines is definitely a good news story,” Galpin added. Investments from Hong Kong that have qualified for investment incentives from Philippine government are currently among the biggest in the country according to the Department of Trade and Industry. Galpin said the number of Hong Kong and Chinese firms showing interest in investing in the Philippine market is not the only one increasing but Filipino companies looking to invest in Hong Kong as well. “We’re starting to see an increase now and with a little bit more push, we can encourage more companies to take the next step,” he said. Galpin cited technology, training and education, and consumer product sectors as potential growth areas in Hong Kong for local businesses. “Hong Kong imports all its food products but we’re a major food market because we have so many visitors. So we’d like to think companies in food and beverage sector can benefit in Hong Kong too,” he said. “At present, we’ve got the (Filipino) big guys. We’ve got the banks, airlines, some big companies using Hong Kong for mergers and acquisition. What I would love to see is the medium sized companies. Companies that are already doing well here but want to take the next step and do something overseas. We want them to consider Hong Kong as their next step. Medium companies, if they have a competitive product, a competitive service, we’d like to think they can do well in Hong Kong also,” Galpin added. The Philippines last Thursday forged a new agreement with the Hong Kong government to bolster investment cooperation between the two economies. The DTI signed a memorandum of intent with executives from InvestHK pledging mutual cooperation on investment promotion exchanges and best practices.The post Philippines remains attractive to Chinese investors appeared first on Asean Investment | Marc Djandji Blog.
Vietnam to be Country of Honour at CAEXPO 2016
NDO/VNA – Vietnam will be Country of Honour at the 2016 China –ASEAN Expo (CAEXPO), Secretary General of the CAEXPO Secretariat Wang Lei announced on September 21. Addressing a press conference in Nanning city, the Chinese province of Guangxi where the CAEXPO 2015 was recently held, Wang said the decision was reached during the 12th CAEXPO senior officials’ meeting on September 20. The Country of Honour mechanism was first introduced at the CAEXPO 2007. It is rotated among ten ASEAN member countries – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. This year, Thailand was named as the Country of Honour. According to Wang, the CAEXPO 2015 attracted 85 groups of investors and buying mission, up 5% last year. Popular products such as rice, coffee, wooden furniture and handicrafts, as well as China’s packaging and food processing equipment and electronics and electrical appliances grabbed the attention of buyers. Many deals were signed, including a memorandum of understanding between the Bank of China’s Bangkok branch and the China-ASEAN Investment Co-operation Fund, and 34 projects involving machinery production, automobile spare parts and construction materials. Fringe events include 27 thematic seminars and forums featuring China – ASEAN co-operation across investment, e-commerce, electronics, pharmaceuticals, mining, finance and tourism, together with 84 trade promotion and investment programmes. Initiated by China, the first CAEXPO was held in Nanning in 2014 in order to promote a free trade zone between the two sides. The event has since become an annual platform for thousands of Chinese and ASEAN businesses. By nhandan.com.vnThe post Vietnam to be Country of Honour at CAEXPO 2016 appeared first on Asean Investment | Marc Djandji Blog.
